"Fines of 45 Million Won Imposed on JW Shinyak for Rebates on Obesity Drugs with Threats to Reduce Support if Not Prescribed"

The former head of the sales division at JW Shinyak, a subsidiary of JW Pharmaceutical, was sentenced to a suspended prison term in the first trial for charges related to 'rebates on obesity drugs.' The JW Shinyak corporation was also fined a large sum.

On the 7th, Judge Yoo Dong-gyun of the Seoul Central District Court Criminal Division 24 sentenced former JW Shinyak sales division head A, who was indicted for violating the Pharmaceutical Affairs Act, to two years in prison with a three-year suspension. JW Shinyak corporation was fined 45 million won. Eight other defendants, including medical professionals, were each fined between 6 million and 25 million won.

Judge Yoo stated, "Pharmaceutical rebates influence medical professionals' selection of specialized drugs and lead to price increases. This increases the burden on patients, causing significant social impact and reflecting poor criminal nature." He added, "JW Shinyak supported sales representatives' rebates over a long period, and A was responsible for overseeing practical procedures and making important decisions regarding this."

At the previous sentencing hearing, the prosecution requested the court to sentence A to two years in prison, stating that "A made key decisions regarding the rebates." They also sought a fine of 45 million won for JW Shinyak. A's defense appealed, asking the court to consider the structural issue that "without providing rebates, the company would inevitably fall behind in the fierce competition among domestic pharmaceutical companies."

A, who oversaw JW Shinyak's sales for seven years starting in 2012, was prosecuted on charges of providing cash rebates worth several million won each time to hospital medical staff through regional sales representatives after securing a cash budget. JW Shinyak, as A's employer, was also indicted.

From January 2014 to April 2017, JW Shinyak was caught by the Fair Trade Commission for providing improper rebates worth approximately 800 million won to 90 hospitals and clinics nationwide to increase prescriptions of its obesity treatment drugs. At that time, JW Shinyak handled 18 types of obesity treatments and contracted with each hospital for a certain amount of obesity drug prescriptions, providing economic benefits equivalent to 20-35% of the contracted amount in advance.

Investigations revealed that JW Shinyak conducted rebates by having sales representatives draft prescription contracts for their assigned hospitals, obtaining approval from sales division head A, and then providing advance payments to the hospitals. JW Shinyak managed the hospitals by monitoring whether they fulfilled the prescription contracts and reducing the advance payment ratio if the contracts were not met.

This content was produced with the assistance of AI translation services.